ORGANIZATION AND CONSOLIDATION

9 Months Ended

Jul. 31, 2011

ORGANIZATION AND CONSOLIDATION

ORGANIZATION AND CONSOLIDATION

(1)The information in the notes and related commentary are presented in a format which includes data grouped as follows:

Equipment Operations - Includes the Company’s agriculture and turf operations and construction and forestry operations with financial services reflected on the equity basis.

Financial Services - Includes the Company’s financial services segment, which consists of the previous credit segment and the “Other” segment that was combined at the beginning of the first quarter of 2011. The “Other” segment consisted of an insurance business that did not meet the materiality threshold of reporting.  It was previously included as a separate segment in “Financial Services” (see Note 9).

Consolidated - Represents the consolidation of the equipment operations and financial services.  References to “Deere & Company” or “the Company” refer to the entire enterprise.

Reclassifications

Certain items previously reported in specific financial statement captions have been reclassified to conform to the 2011 financial statement presentation.  Short-term securitization borrowings have been shown separately from other short-term borrowings on the Condensed Consolidated Balance Sheet as a result of the adoption of Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2009-17 (see Note 3).  In the Supplemental Consolidating Data in Note 21, the costs and collections of trade receivables and wholesale notes for the financial services statement of cash flows investing activities have been presented on a net basis.  These receivables have short durations with a high turnover rate.  The total cash flows for the financial services investing activities have not changed.  The presentation of these receivables on the Statement of Consolidated Cash Flows has also not changed and continues to be shown as an adjustment to net income in the operating activities since they are related to sales.

Variable Interest Entities

The Company is the primary beneficiary of and consolidates a supplier that is a variable interest entity (VIE).  The Company has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE based on a cost sharing supply contract.  No additional support beyond what was previously contractually required has been provided during any periods presented.  The VIE produces blended fertilizer and other lawn care products for the agriculture and turf segment.

The assets and liabilities of this supplier VIE consisted of the following in millions of dollars:

	July 31 2011		October 31 2010		July 31 2010
Intercompany receivables	$	14	$	10	$	13
Inventories	36		32		54
Property and equipment - net	4		4		5
Other assets	14		11		6
Total assets	$	68	$	57	$	78
Short-term borrowings					$	5
Accounts payable and accrued expenses	$	64	$	55	72
Total liabilities	$	64	$	55	$	77

The VIE is financed through its own accounts payable and short-term borrowings.  The assets of the VIE can only be used to settle the obligations of the VIE.  The creditors of the VIE do not have recourse to the general credit of the Company.

The Company previously consolidated certain wind energy entities that were VIEs, which invested in wind farms that own and operate turbines to generate electrical energy.  In December 2010, the Company sold John Deere Renewables, LLC, which included these VIEs and other wind energy entities.  No additional support to these VIEs beyond what was previously contractually required was provided during any periods presented.

The assets and liabilities of these wind energy VIEs consisted of the following in millions of dollars:

	October 31 2010		July 31 2010
Receivables - net			$	2
Property and equipment - net			130
Other assets			1
Assets held for sale *	$	133
Total assets	$	133	$	133
Intercompany borrowings	$	50	$	46
Accounts payable and accrued expenses	5		5
Total liabilities	$	55	$	51

* See Note 19.

The VIEs were financed primarily through intercompany borrowings and equity.  The VIEs’ assets were pledged as security interests for the intercompany borrowings.  The remaining creditors of the VIEs did not have recourse to the general credit of the Company.

See Note 11 for VIEs related to securitization of financing receivables.